The average citizen is ignorant of how money works. The dollar is just a medium of exchange (a paper credit with changeable value). The value depends on two variable factors: 1) how many dollars are in circulation and 2) how many people are using them. Both may independently increase or decrease. Too many dollars and too few people will decrease the value, leading to higher prices as sellers of wares/services seek to maximize profits due to freer spending (inflation). Too few dollars and too many people leads to less spending and to reluctance of sellers/services to lower their prices, leading to fewer transactions and lower profits (deflation, depression, economic collapse). Faced with economic collapse, government has just two options: 1) higher taxes on the wealthier or 2) printing more dollars, increasing national debt. Congress refused to raise taxes on the wealthier, so printing more money was the only option open.
Many factors play a role in decreasing the number of dollars in circulation. Dollars held in private bank accounts are dollars taken out of circulation. The wealthier classes are those who most withhold dollars from circulation, but offenders also include those who park dollars in checking accounts, savings accounts, retirement accounts, shoe boxes or investment accounts. Annual payments of dollars to Israel and Egypt take dollars out the U.S. economy. Stationing of American troops in other countries means American dollars will be transferred out of U.S. economy into the foreign economy. Then there are those who send dollars out the country to relatives, make foreign investments, buy foreign products or those companies like Wal Mart, which send American jobs to foreign countries. Wal Marts supply chain includes some 30,000 Chinese factories, which produce an estimated 70 percent of all the goods it sells (Mother Jones, March/April 2012). That is just one company shipping products to America tariff free. This means U.S. dollars must be exchanged for Chinese money, leaving China holding a lot of American debt, with which it can buy up chunks of America, influence American politics and build up Chinas military.
The job of a CEO is to produce profits for stockholders. Stockholders reward the CEO with outrageous wages and benefits, expecting the CEO to transfer much wealth from the company into the accounts of stockholders, thus taking those dollars out of circulation, further necessitating that the government print more money, thereby increasing national debt again, again and again.
Perhaps former CEO Mitt Romney can tell us just how he is going to preserve our economy from such legal perpetual organized thieving of lower-class dollars without raising taxes on wealthier classes or raising the national debt.
RICHARD D. SLOAN